Final answer:
The three main credit bureaus are Equifax, Experian, and TransUnion. They compile credit reports used by lenders to make fair credit decisions based on financial behaviors, not discriminatory factors. Credit ratings by agencies influence individual borrowers' interest rates and lending risks.
Step-by-step explanation:
The three main credit bureaus that create a credit report for you are Equifax, Experian, and TransUnion. These organizations are responsible for collecting and maintaining individual credit information and providing it to potential lenders, employers, and other entities who have a legitimate need for accessing your credit history.
A credit report includes details of your credit accounts, payment history, outstanding debts, and public records such as bankruptcies or foreclosures. It's important to provide only the minimum information requested by any source and to monitor your credit history for signs of identity theft.
Lenders make credit decisions based on the information in your credit reports, which is considered to be a fair way to evaluate creditworthiness. Factors like race, gender, and religion do not affect your credit score. A poor credit score can improve over time as you build up a history of positive financial behavior. Banks and other lenders also consider additional factors such as savings and investments while making their lending decisions.
Credit ratings are not only important for individual borrowers but also influence the interest rates that may be offered. These ratings are established by considering a borrower's past and present borrowing history and their reliability in repaying loans. Companies like Standard and Poor's and Moody's provide credit ratings that help banks to determine the level of risk associated with lending to a particular borrower or business.